Bureaucrats and state legislators in Montana battle over scholarship tax credits

Legislators are disputing a ruling that denies tax credits to citizens who contribute to scholarship funds at religious schools.

Legislators in Montana are disputing a ruling by the state’s Department of Revenue that denies tax credits to citizens who contribute to scholarship funds at religious schools.

Under a law enacted in May, individuals are supposed to become eligible for a $150 tax credit if they make a donation to any scholarship fund in the state, but Catholic Education Daily reports that the bureaucracy has decided that awarding tax credits for donations to sectarian institutions would be unconstitutional.

The credits are intended to expand access to school choice by increasing the availability of scholarships for K-12 private schools, but can also be used by public schools for “innovative educational programs,” such as courses that allow students to earn college credits while in high school.

The Revenue Department claims it is bound by a provision in the Montana Constitution disallowing “any direct or indirect appropriation” to institutions with ties to religious denominations, and is therefore unable to provide the tax credit to individuals who donate to the scholarship funds of colleges and universities with such affiliations.

According to The Becket Fund for Religious Liberty, the provision in question (Article X, Section 6)—known as the “Blaine Amendment—was devised as an oblique way to limit the influence of Catholics in 19th century America, and is currently on the books in 37 states, including Montana.

Named after James G. Blaine, the Republican House Speaker and sometime presidential candidate who proposed adding such an amendment to the U.S. Constitution, the Blaine Amendments use the seemingly-neutral term “sectarian,” but were imposed at a time when anti-immigrant sentiment ran strong, particularly with respect to an influx of Catholics from Europe.

“We shouldn’t have laws on the books that arose out of bigotry,” Eric Baxter, senior counsel for The Becket Fund for Religious Liberty, told The Cardinal Newman Society. “When the government extends a benefit of any kind to citizens of the state generally, it can’t discriminate against some of them on the basis of religion.”

State Sen. Llew Jones, who sponsored the tax credit law, also disputes the Department’s ruling, telling the Billings Gazette that the rules “do not reflect the legislative intent.”

The Institute for Justice has gotten involved, as well, filing a lawsuit on behalf of three Montana mothers who believe they were illegally deprived of the tax credits.

“The Department of Revenue does not have the authority to exclude families who want to send their children to religious school under the program,” IJ Senior Attorney Dick Komer explained in a press release announcing the challenge.

“The rule also violates both the state and federal Constitutions because it allows scholarship recipients to attend any private school except religious ones,” added IJ attorney Erica Smith. “That’s discrimination against religion.”

The effort has also received support from the State Attorney General’s Office, which sent written comments to the Department of Revenue in November warning that the proposed rule “would not be defensible” in court and would likely be overturned by a judge because it “categorically excludes religious entities from an otherwise neutral benefits program.”

Even as that process unfolds, Catholic Education Daily notes that an even larger challenge is being made to Blaine Amendments across the country, and could be decided by the U.S. Supreme Court as early as next year.

Peter Fricke is the Managing Editor for Campus Reform. He has previously worked on state and national political campaigns, and was a reporter for The Daily Caller News Foundation. His email address is pfricke@campusreform.org.

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